Electric Heat Revolution: Navigating the Landscape of the Future Electricity Market

As the global movement towards energy system decarbonisation gains traction, electrifying heating systems will emerge as a pivotal approach to reduce carbon emissions in the residential sector. Electrification promises a substantial reduction in greenhouse gas emissions, improved energy efficiency, and enhanced integration of renewable energy sources. Furthermore, electrified heating systems offer flexibility through demand response mechanisms, contributing to grid stability and resilience.

The challenges of electrifying heating systems are multifaceted, encompassing technical, economic, and societal dimensions. Technical challenges include addressing the intermittency of renewable energy sources, upgrading existing infrastructure, and ensuring grid reliability. Economic challenges involve the costs associated with technology adoption, potential impacts on energy bills, and financial considerations for both consumers and utilities. Societal challenges entail managing the transition for workers in traditional heating industries, addressing potential energy poverty concerns, and fostering public acceptance. Alongside these challenges, the transition to electrified heating has the potential to substantially influence the optimal design of the electricity market. The increased demand for electricity, particularly during peak heating periods, necessitates strategic modifications to market structure and operational frameworks. While there are numerous advantages and improvements associated with this transition, a comprehensive understanding of the impacts of the electrification of heating within the electricity market is currently lacking.

The main goal of this paper is to assess the advantages and challenges associated with electrifying heating systems, and potential changes that will take place in the electricity market as a consequence of this electrification. Through an extensive literature review, this paper seeks to contribute valuable insights for the development of strategies and policies aimed at fostering a sustainable and resilient electricity market, particularly in the evolving landscape of heating technologies.This study lays the groundwork for additional investigation into the complex relationship between heating electrification and the changing electricity market, providing important information for sustainable energy transitions.